Before you swipe: the pros and cons of using debit cards

Using debit cards to purchase has become the norm. Like any other way to pay, there are pros and cons to using them. Before you swipe, here's what you should know.

According to the Bank of Canada, the value of point of sale (POS) transactions for debit cards has recently reached $180 billion, with an average transaction value of $44. While debit cards have become popular because of their ease-of-use, consumers should be aware of the debit card’s pros and cons. This is essential to know because the world of banking has become complex, loaded with fees, and tainted with fraud.

The debit card is now accepted in most retail and business stores in North America. Once the purchase has been made, the money is paid by swiping the card at an electronic machine or inserting it in a scanning device. The money is deducted from a chequing or savings account. The debit card also allows one to withdraw cash from automated teller machines (ATM).

• For most people, a debit card is a convenient way to conduct personal and professional business instead of carrying cheques or large sums of cash.

In general, there are usually no fees associated with the use of a debit card for purchasing items. However, withdrawal of cash at some ATMs is associated with a fee that can range from two to five dollars. Thus, it is vital to read the small print from the bank where you obtained your debit card to determine which ATMs will charge you the extra fee.

• The good news is that bank ATMs can be found pretty much on any corner in large cities, making them convenient in a pinch.

Unlike a cheque, once a debit card is used, the money is withdrawn from the bank within 12-24 hours. This short period of time means you will have little time to cover for any withdrawals. It is highly recommended that you regularly check the balance in your checking account before using a debit card.

• In many instances, if there is no money in the bank, the debit card purchases will be denied.
• Other cons about debit cards is that they do not improve your credit score, have a lower level of protection compared to a credit card, and you can't take advantage of any travel reward points.

To ensure safety, most debit cards come with a Personal Identification Number (PIN), which you enter at the time of purchase. It is vital to keep this PIN in a place other than your wallet, so that it does not get into the hands of others if your wallet is lost.

• It's also good practice to change your PIN every couple of months.

If for any reason your debit card is lost, it should be reported to the bank immediately. In most cases, you are not financially responsible for unauthorized transactions, but resolving the situation can be trying.

For more information regarding your debit card, you can always get in touch with your local bank.